Daily Brief Consumer: Sun Art Retail, DFI Retail Group Holdings, Catur Sentosa Adiprana Tbk, International Game Technology Ordinary Shares, Conagra Foods, China Southern Airlines, Bubbles Group and more

• Sun Art Retail (6808 HK) entered a trading halt under the Code on Takeovers and Mergers. Bloomberg suggests Alibaba Group Holding (BABA US)’s stake is attracting preliminary interest from PE.
• Alibaba built its 78.70% stake through two purchases in 2017 (HK$6.50) and 2021 (HK$8.10). An exit would align with the strategy to focus on the core business segments. 
• The recent Miniso-Yonghui transaction could have prompted PE to act. An offer at book value would imply HK$2.50, a 40% premium to the last close price. 

• Hypermarket reshuffles as JD.com (9618 HK) and DFI Retail (DFI SP) exit Yonghui Superstores (601933 CH); and Alibaba Group  (9988 HK) potentially exits Sun Art Retail (6808 HK).
• Evidently the influence of a younger hip third-generation tycoon-scion wasn’t the panacea for New World Development (17 HK) and its ongoing issues in the HK/China property space.
• MBK bumps the Tender Offer prices for Korea Zinc (010130 KS) by 13.6% to ₩750,000 and Young Poong Precision (036560 KS) by 25% to ₩25,000. What with the Choi’s do?

• Catur Sentosa Adiprana (CSAP IJ) has grown rapidly from a building material distribution company into the leading retailer in building materials and home improvement through Mitra10 and shop-in-shop Atria. 
• The company already has 52 Mitra10 superstores in Indonesia, with six distribution centres across the country, selling a range of home decoration products, with an increasing portion of private labels.
• CSAP has seen a market improvement in margins for Mitra10 through more private label and scale benefits, and margins will continue to improve. Valuations are attractive with earnings growth accelerating. 

• International Game Technology (IGT) has reported its Q2 2024 earnings, showing strong performance in both revenue and operational metrics.
• In its second quarter, IGT generated revenue of $1.05 billion, maintaining levels similar to the prior year, and achieved an operating income of $230 million.
• When excluding one-time separation and divestiture costs of $26 million, the operating income margin impressively improved by 40 basis points to 24.4%.

• Conagra Brands, in their Q4 and Fiscal Year 2024 earnings, presented a mixed set of results reflecting a transitional phase in consumer purchasing behavior and pricing adaptation.
• CEO Sean Connolly emphasized the gradual normalization of the operating environment as consumers adjust to new price benchmarks, a process he described as ongoing rather than immediate.
• Baptista Research looks to evaluate the different factors that could influence the company’s price in the near future and attempts to carry out an independent valuation of the company using a Discounted Cash Flow (DCF) methodology.

• Outbound & domestic travel activity continued to recover nicely in August
• Initial reports suggest Mid-Autumn Festival travel activity was solid, too
• After recent surge, we’ve cut Trip.com to HOLD; check out airlines instead

Lucror Analytics’ ESG Scores are based on a 3-tiered scale and are adjusted for Controversies (if applicable).
We assess Bubbles Group’s ESG as “Adequate”, in line with its Social and Governance scores, while the Environmental score is “Weak”. Controversies are “Immaterial” but Disclosure is “Weak”.